2008 (8) TMI 798 - SC - Companies Law

Whether the period spent by the appellant in prosecuting the aforementioned proceedings should be excluded or not is a matter which must fall for decision before the Principal Civil Court. The necessary corollary of the aforementioned finding is that as to whether the appellant had been prosecuting, with due diligence another proceeding or not would fall for consideration before the Principal Civil Court. The impugned judgment of the High Court, therefore, cannot be sustained. Appeal allowed.

Summary

Issues Involved:
1. Application of Section 14 of the Limitation Act, 1963 in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996.
2. Whether the objection filed under Section 34 of the Arbitration and Conciliation Act was barred by limitation.
3. Interpretation of arbitration agreement clause in the contract.
4. Applicability of Section 5 of the Limitation Act to arbitration proceedings.
5. Whether the period spent in prosecuting another proceeding should be excluded under Section 14 of the Limitation Act.

Detailed Analysis:

1. Application of Section 14 of the Limitation Act, 1963:
The primary issue was whether Section 14 of the Limitation Act, 1963, which allows exclusion of time spent in bona fide litigation in a court without jurisdiction, applies to proceedings under Section 34 of the Arbitration and Conciliation Act, 1996. The Supreme Court held that Section 14 of the Limitation Act is applicable to arbitration proceedings by virtue of Section 43 of the Arbitration and Conciliation Act, 1996. This was supported by the precedent set in State of Goa v. Western Builders, which clarified that Section 14 is not expressly excluded by the Arbitration and Conciliation Act, 1996.

2. Limitation for Filing Objection Under Section 34:
The appellant filed an application under Section 34 of the Arbitration and Conciliation Act on 8.12.2003, which was held to be barred by limitation. The High Court dismissed the appeal, relying on the decision in Union of India v. M/s. Popular Constructions Company, which stated that Section 5 of the Limitation Act does not apply to Section 34 applications. However, the Supreme Court revisited this issue, considering the applicability of Section 14 of the Limitation Act.

3. Interpretation of Arbitration Agreement Clause:
The contract between the parties included a clause for dispute resolution by the Superintending Engineer, PWD, Gulbarga. The Supreme Court in Mallikarjun v. Gulbarga University held that this clause constituted a valid arbitration agreement. The Court emphasized that the decision of the arbitrator, named in the clause, must comply with the principles of natural justice, including allowing parties to adduce evidence and be heard.

4. Applicability of Section 5 of the Limitation Act:
The Supreme Court clarified that while Section 5 of the Limitation Act, which allows for condonation of delay, is excluded by the Arbitration and Conciliation Act, 1996, Section 14 is not. The Court highlighted the need for a harmonious interpretation of overlapping statutes, ensuring that Section 14's applicability remains intact unless expressly excluded.

5. Exclusion of Time Spent in Other Proceedings:
The Supreme Court held that the question of whether the time spent by the appellant in prosecuting other proceedings should be excluded under Section 14 of the Limitation Act must be decided by the Principal Civil Court. The Court remitted the matter to the Principal Civil Court to determine if the appellant had prosecuted the earlier proceedings with due diligence.

Conclusion:
The Supreme Court set aside the High Court's judgment and remitted the matter to the Principal Civil Court for fresh consideration, emphasizing the applicability of Section 14 of the Limitation Act to arbitration proceedings. The appeal was allowed, and the Principal Civil Court was directed to decide on the exclusion of time spent in other proceedings based on due diligence. No order as to costs was made.